Why Are Electricity Rates So High in Costa Rica? Act 7200

Costa Rica News – Most of us that live in the land of “Pura Vida” have just grown accustomed to paying astronomical gasoline prices and fairly high electricity prices. It is just part if living in Costa Rica due to the fact that both of these sectors are controlled by monopolies.

Lack of competition and no threat of losing market share allows Recope and ICE to basically charge whatever they want and the profits go back into the pockets of the Costa Rican government.

When it comes to electricity it is actually a written act that prohibits competition.

There is a limit, in Act 7200, that the Costa Rican Electricity Institute (ICE) can only purchase 15% of the energy in the National Electricity System (SEN). The law is to prevent privatization of the industry.

The problem (besides lack of competition to drive prices down) is that this year they reached that limit, leaving 81 private companies on a waiting list to sell energy to ICE. The 81 projects would add a capacity of 1,207 MW, almost half of the current installed capacity.

A request was made to allow 30% to be from private companies, but this was rejected on the basis that the energy being produced by plants already contracted and operating (both public and private) is enough to cover demand until at least 2019, and even at that point it is not likely that the 81 will be brought into the system.

Opening competition could result in cleaner and cheaper energy.

Act 7200 should be repealed.

In December it was established that all private companies must sell each kWh at 37¢.

The price we pay, after adding in what ICE invests in purchasing, operating costs, transmission and distribution is 91¢.